Crude oil is slightly lower ahead of tomorrow’s U.S. Consumer Confidence figures. The bias remains higher, but a bit of consolidation is possible before prices attempt to breach the psychological $80 level.
Commodities - Energy
Crude Oil Takes a Breath
Crude Oil (WTI) $78.93 -$0.05 -0.06%
Commentary: Monday was a day of pause for crude oil, as the commodity finished literally flat. Equity markets, on the other hand, finished notably higher in the session, rising over 1%. From a fundamental perspective, there was little to drive oil other than new home sales figures out of the U.S., but that is an insignificant data point as it relates to crude. Tomorrow brings the release of the Conference Board’s Consumer Confidence survey for July, which is expected to show a reading of 51, down from 52.9 in the prior month. Barring significant deterioration in global economies, crude oil should gradually climb higher, but abundant inventories and high levels of OPEC spare capacity should keep prices contained below the mid-$80’s in the near-term.
Commentary: Monday was a day of pause for crude oil, as the commodity finished literally flat. Equity markets, on the other hand, finished notably higher in the session, rising over 1%. From a fundamental perspective, there was little to drive oil other than new home sales figures out of the U.S., but that is an insignificant data point as it relates to crude. Tomorrow brings the release of the Conference Board’s Consumer Confidence survey for July, which is expected to show a reading of 51, down from 52.9 in the prior month. Barring significant deterioration in global economies, crude oil should gradually climb higher, but abundant inventories and high levels of OPEC spare capacity should keep prices contained below the mid-$80’s in the near-term.
Technical Outlook: Prices have continued to push higher having bounced from support at the bottom of a rising channel established from late April, with the bulls now threatening resistance at $79.38, the June swing top. Continued gains from here will challenge the channel top, now at $81.46.
Commodities - Metals
Gold Probing Recent Lows
Gold $1185.20 +$1.65 +0.14%
Commentary: Gold lost $5.65, or 0.48% on Monday, as prices make their way back toward recent lows. Gold ETF holdings finally increased, arresting a four-day decline, but just barely. With risk appetite in the broad financial markets retuning and Euro-area sovereign debt concerns completely off the radar, there is nothing to encourage gold investors to buy aggressively. Indeed, as such investors already hold near-record amounts of the metal, there exists enormous risk to the price of gold in the event further liquidation occurs.
Commentary: Gold lost $5.65, or 0.48% on Monday, as prices make their way back toward recent lows. Gold ETF holdings finally increased, arresting a four-day decline, but just barely. With risk appetite in the broad financial markets retuning and Euro-area sovereign debt concerns completely off the radar, there is nothing to encourage gold investors to buy aggressively. Indeed, as such investors already hold near-record amounts of the metal, there exists enormous risk to the price of gold in the event further liquidation occurs.
Technical Outlook: Positioning has been little changed in recent weeks with prices consolidating at support marked by a rising trend line established from the swing bottom in early February. A bounce sees initial resistance at the $1200 figure, followed by a horizontal barrier at $1215.47. Alternatively, a break lower sees initial support at $1170.
Silver $18.16 +$0.00 +0.00%
Commentary: Silver decoupled from gold, rising 0.30% on Monday. The gold/silver ratio is down to 65.26, the lowest level since May. As the bulk of precious metal investors piled into gold rather than silver, there is more room for selling in the metal, which could explain some of the recent gold-silver divergence. Nevertheless, we maintain that silver will largely take its directional cues from gold.
Commentary: Silver decoupled from gold, rising 0.30% on Monday. The gold/silver ratio is down to 65.26, the lowest level since May. As the bulk of precious metal investors piled into gold rather than silver, there is more room for selling in the metal, which could explain some of the recent gold-silver divergence. Nevertheless, we maintain that silver will largely take its directional cues from gold.
Technical Outlook: Prices continue to consolidate within a descending triangle chart formation above support at $17.45. This setup is typically a continuation pattern, hinting further gains ahead. That said, it also carries a negative connotation and may hint at an emerging bearish bias. A break below support exposes at the $17.00 figure, while a rebound sees initial resistance at $18.58.
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